Trade court strikes down Trump 10% universal tariffs

Courtenay Brown

Photo illustration: Sarah Grillo/Axios. Photo: Chip Somodevilla/Getty Images

The Court of International Trade on Thursday ruled that President Trump's newest round of tariffs were illegal — but the duties will keep collecting for most importers while the administration appeals.​​​​​​​​​​​​​​​​

Why it matters: It is yet another legal setback for the White House's trade policy — this time ruling against the suite of tariffs that officials imposed to replace those struck down by the Supreme Court.

State of play: Trump turned to Section 122 — a never-before-used provision of the Trade Act of 1974 — the same day the Supreme Court struck down the bulk of his tariffs in February, imposing a 10% across-the-board surcharge set to expire July 24.

• The trade statute allows the president to impose a temporary tariff of as much as 15% for up to 150 days to address "large and serious" balance-of-payments deficits.
• The small businesses that brought the suit, a spice company and a toy retailer, are represented by the Liberty Justice Center, the same group that helped argue the last successful tariff challenge before the Supreme Court.
• The Court of International Trade tossed the claims of 23 of the 24 state attorneys general, ruling their harms from the tariffs were too indirect to establish standing.

Zoom in: Unlike its order following the Supreme Court ruling, in which the Court of International Trade initially issued a nationwide injunction covering all importers, this one is narrower in scope.​​​​​​​​​​​​​​​​

• The court ruled the tariffs illegal and entered a permanent injunction, though only for the plaintiffs in the case (and the administration is widely expected to seek a stay from the Federal Circuit before it takes effect).

What they're saying: In a 2-1 ruling, the trade court said that if the president can decide what counts as a "balance-of-payments deficit," he can always find one — essentially allowing the law to be triggered at any moment.

• "[I]f the President has the ability to select among the sub-accounts to identify a balance-of-payments deficit, unless every sub-account is balanced, the President would always be able to identify a balance-of-payments deficit," the court said in its ruling.
• "Such an expansive reading of the statute" would give Trump unlimited tariff power that belongs to Congress, the court said.

Flashback: Much of last month's hearing dealt with how to define such a crisis — and whether the nation is in one now.

• The government argued that the current account deficit — the broadest measure of what the U.S. pays out to the rest of the world versus what it takes in, of which the trade deficit is a large part — is the modern stand-in for what Congress meant.
• Plaintiffs said the type of monetary crisis the law was designed to address hasn't existed since the U.S. left the gold standard in the 1970s.

What to watch: "This decision will surely be appealed by the administration, and there is already a 'plan C' in place: the section 301 investigations that are already underway," Tim Brightbill, co-chair of the law firm Wiley Rein's international trade practice, tells Axios.

• A White House spokesperson did not immediately respond to a request for comment.

The bottom line: Tariffs are at the center of Trump's economic agenda. The courts keep telling Trump that the tools he uses to impose them are illegal.

• But these duties are set to expire in July anyway — and the administration has signaled that replacement tariffs will likely be enacted before then — so the administration may not need to win in court to keep high tariffs in place.